Asian physical rubber extended gains on Tuesday despite falls in the Tokyo Commodity Exchange as concerns over declining supplies supported the market. Trading revived with some Chinese buyers seeking Thai RSS3 at around $2.08 per kg for prompt shipment, traders said.
"But fewer Thai producers could sell at this price as raw material prices are higher and less supply is available," a Thai trader said. Unseasonal rains in Thailand's south, the main rubber growing area which accounts for around 90 percent of the country's annual production of 3 million tonnes, are likely to hit tapping.
Dealers said raw material prices could rise further with widespread rains in Malaysia and an early start of the dry season in Indonesia when trees produce less latex. Indonesia and Malaysia are the second and third largest natural rubber producers after Thailand.